Lights out at Interoute

ITworld.com –

The office lights are already turned off at privately owned bandwidth company Interoute in London. Next to go could be the lights of its 18,000-kilometer European fiber optic network.

On Tuesday, a call to the head office of Interoute was taken by a security guard who said the building was empty and company officials could no longer be reached.

A dark cloud has hovered over Interoute ever since its network holding company i-21 Holdings Ltd. went into administration on Nov. 19.

Nick Dargan and Nick Edwards, partners in the London-office of Deloitte & Touche LLP, have been appointed as joint administrative receivers of i-21 Holdings Ltd., i-21 Future Communication Ltd. and i-21 Ltd, Interoute said in a statement.

The administrators will oversee the running of the i-21 network while they look for potential buyers, a spokeswoman for Deloitte & Touche said, declining to comment on the search for a new owner. "There is nothing we can say about the proceedings at this time," she said.

The i-21 fiber-optic network consists of eight rings connecting 45 cities in nine countries, with a capacity to carry a petabit (one billion megabits per second) of traffic. It includes metropolitan area networks (MANs) in Amsterdam, Frankfurt, London, Madrid, Milan, Paris, Rome and Vienna.

In July, Interoute purchased the Ebone Internet backbone network from bankrupt KPNQwest NV.

Just over two weeks ago, the company signed a five-year agreement to supply Infonet Services Corp., a provider of global communications services for multinational corporations, with dark fiber across its London MAN.

Interoute is owned by a group of investors, including the wealthy Sandoz Family Foundation from Switzerland.

Paris-based telecom manufacturer Alcatel SA is a key supplier of equipment and funding to the i-21 network.

The Sandoz Family Foundation and Alcatel appear to have disagreed on the way forward with financially troubled i-21. "The Sandoz family told us in September that they wanted to stop funding i-21 and would only continue if an administration plan, an MBO (management buy-out), went ahead," said Klaus Wustrack, a spokesman for Alcatel. "Then we heard they're turning everything over to the court. Since we are the biggest creditor, we have the right to put in our own receivers, and we've done this."

Still unclear is how customers, such as Cable and Wireless PLC and Memorex Telex Communications AG, will be affected by the collapse of yet another bandwidth baron.

"In their search for stable suppliers, businesses are increasingly turning to government-owned suppliers," said Raj Modi, an analyst with Ovum Ltd. "Governments aren't known for pulling the plug on companies in which they own a stake."

According to Modi, some of the remaining bandwidth providers -- and there are still enough of them -- are beginning to offer a "security premium," whereby customers pay more for guaranteed service over a several year period.

The former monopoly telephone companies, he said, couldn't be happier with this development, since it appears that competition is being reduced at the same time customers are willing to pay more for premium services.

From CIO: 8 Free Online Courses to Grow Your Tech Skills
Join the discussion
Be the first to comment on this article. Our Commenting Policies